Barely a week goes by without another scene being played out in the long-running pantomime at Interpublic Group (IPG).
Last week, the troubled marketing services group found out that it would have to defend its hold on the $600m (&£340m) Bank of America (BofA) account, after the bank shortlisted WPP Group and Omnicom to pitch for the business. The move follows the departure of Bruce Nelson, the executive vice-president who oversaw the account through a bespoke unit called Flag, set up by IPG to service the business.
After a spate of losses at the beleaguered group, including Unilever and General Motors out of Initiative and Nestlé out of Universal McCann, another review is no surprise.
But this is the second time IPG has gone to the trouble of setting up a bespoke unit to service a client only to find the business under threat. It created GM Media Works in the US to service the car manufacturer’s $3.2bn (&£1.8bn) buying account, but when the business went up for pitch earlier this year, it was awarded to Publicis Groupe-owned Starcom.
Nelson’s team manages the BofA account with the aid of 16 IPG agencies covering creative, media buying and planning, direct marketing, branding and PR.
This mode of service does not suit all companies – it was rejected by Boots in 2003, when it parted company with a WPP-owned consortium of agencies.
One industry consultant says: “It was a deal engineered by Sir Martin Sorrell for Boots’ chief executive at the time, Steve Russell, who needed to go to the City with a cost-saving plan. The agencies working on the business in turn focused only on maximising their share of the fixed budget.”
But WPP has gone on to win work from Samsung and HSBC with the promise of similar bespoke units. Some 18 WPP shops work on the HSBC account, for which Team HSBC was created. Samsung reportedly has access to six agencies in the UK alone.
One advertising consultant says the creation of these “mini-agencies” works well for meeting the needs of global clients such as HSBC, “which not only look for cost savings but also want an integrated approach”.
Leo Burnett group chief executive Bruce Haines says that only global brands that want to talk to people with similar needs in different markets – finance and telecoms brands, for instance – can justly demand a made-to-order approach.
The industry consultant makes the point that global clients may be attracted to a bespoke unit if they know that the “add-on” is “a Sorrell-type figure at the end of the phone”. But he warns that these units, while fine in theory, tend to fall apart at the seams because the agencies serving the client are competing against each other for a larger share of the advertiser’s business.
Haines adds that some global clients prefer to have a greater degree of flexibility when choosing agencies, as different local markets aren’t always suited to the same approach. He points to Procter & Gamble and McDonald’s, both of which employ rosters of agencies across different marketing services groups and markets.
BofA, meanwhile, has not rejected by any means the idea of a bespoke unit to service its business. If it stays true to the concept of a tailored network, the question is: which marketing services group will weave together the most alluring tapestry of agencies – Omnicom, WPP or IPG itself?